MARANA, Ariz. -- The highlights list for American innovation is long indeed, but so is the list of complaints.

U.S. public transit -- from trains to airplanes -- is second-class. Mobile phone service is subpar. Infrastructure? Inferior. American education: left wanting, particularly at the secondary school level. And let's not even talk about healthcare, where Americans outspend the world by a tremendous margin with little to show for it in terms of lifespan.

As the world becomes flat and society more global, innovation is no longer left only to the U.S. The geopolitical dynamic is the same as the one in the corporate world: the incumbent struggles to keep up while more nimble rivals out-maneuver it.

So how can the U.S. keep competitive? That's the question bright minds sought to answer here at the Techonomy conference in Tucson. The Institute for Large Scale Innovation's John Kao, the University of California San Diego's Pradeep Khosla and Ericsson's Vish Nandlall sat down and discussed what the U.S. can do. (River Twice Research's Zachary Karabell moderated.)

Their answer? A laser focus on applied technology, support for education and a novel immigration policy will help the U.S. remain attractive to bright minds abroad.

"The big news about innovation is, in fact, that it's gone global," Kao said. In the modern era, it began with the postwar period in the U.S., which stoked innovation. A second wave came about two decades ago in countries like Finland and Singapore, that placed emphasis on science and education progress. And a third wave -- the one we see today -- shows countries naming chief innovation officers and outlining innovation strategies.

"Big chips are being pushed in the middle of the poker game," Kao said.

As it turns out, developing support structures for innovation is more difficult than it seems. Even in Singapore, which otherwise saw rapid progress in this area, officials offered a prize to reward the best failure -- then discontinued it, because the program itself was a failure.

"But competitiveness is a national issue," Kao warned, training his sights back on the U.S. "We don't want to become a country of innovation haves and have-notes."

Part of the problem is that many American officials don't fully understand what innovation is.

"We tend to conflate innovation and invention," Nandlall said. "It's a combination of the two [through which] the U.S. has been successful in moving the yardstick forward on its competitors."

What does that mean? For example, you might invent something the world has never before seen -- think Nikola Tesla -- but you need to innovate on how to sell it (think Thomas Edison and his public demonstrations) to really change the game. "Disruptive change as a function of innovation and invention has really yielded all this success in the U.S." Nandlall said.

Then there's the matter of investment in the infrastructure to foster that kind of research and development.

Khosla said much of the lead the U.S. has enjoyed resulted directly from investment in technology -- and therefore universities -- after the Second World War. After the nation entered peacetime, those military innovations were translated "to the benefit of mankind."

"The best infrastructure we created to create innovation in this country was the Great American Research University," Khosla said. He also said that there's massive value in open-ended research. For example, nanotubes were developed long before anyone knew what to do with them. Today, they're on the cutting edge of, well, everything. "Focusing all funding on near-term technologies is actually a mistake," he said.

But it starts with people. "How can we avoid being an island of innovation?" Kao asked.

Khosla answered. "We are becoming more and more inward-looking, and our immigration policies are changing."

The standard of living elsewhere in the world -- China, Eastern Europe, Brazil -- is expanding at a more rapid pace than what's seen in the U.S today, making the U.S. less attractive a destination. Add to that an immigration policy that's "so messed up," and the U.S. is threatening its own future.

Why not give immigrant visas to all-highly-qualified people who seek to live in the U.S.? Would that not ensure America's continued innovation leadership?

"We are on our way to making this a crisis," Khosla said. "We may not be at the critical point right now, but we are on our way."

And that starts with retaining graduate students who come to the U.S. to study, instead of sending them back home. "We as a country cannot afford to invest in R&D for the rest of the world," Khosla said, and that's precisely what the U.S. has done thus far.

Kao concurred.

"The old mercantile tradition of 'I win, you lose' doesn't necessarily apply to the innovation economy," Kao said. "To innovate at scale requires a global perspective. The value chains are now splayed out over the entire world."

Andrew Nusca is a former writer-editor for ZDNet and contributor to CNET. He is also the former editor of SmartPlanet, ZDNet's sister site about innovation. He writes about business, technology and design now but used to cover finance, fashion and culture. He was an intern at Money, Men's Vogue, Popular Mechanics and the New York Daily Ne...
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